Passenger car retail sales in China, the world’s biggest auto market, fell 80% in February because of the coronavirus epidemic, one of the country’s industry associations said.

The China Passenger Car Association (CPCA) said in a statement that China’s overall passenger car sales dropped 80%, without giving a full sales figure for the month.

“Dealers returned to work gradually in the first three weeks of February and their showroom traffic is very low,” CPCA said, adding it expects February’s sales drop will be the steepest of this year.

Japanese automaker Toyota, the first major global automaker to report its February sales in China, said it sold 23,800 Toyota and premium Lexus cars last month, down by 70% from a year earlier.

The world’s biggest car market is bracing for further bad news as efforts to curb the spread of the coronavirus, which has killed more than 2,900 people in mainland China, disrupts global supply chains and dampens consumer demand.

Toyota rival General Motors, China’s second biggest foreign automaker, said the industry will face “serious challenges” in the first quarter this year, but anticipates the situation will ease in the second quarter, its China president Matt Tsien said in a post on GM’s official WeChat account.

GM hopes China’s auto sales will report year-on-year growth in the second half of this year, Tsien added.

The coronavirus likely halved China’s economic growth in the current quarter compared with the previous three months, more severe than thought just three weeks ago and triggering expectations for earlier interest rate cuts, a Reuters poll found.

So far, the virus outbreak has spread from China to more than 80 countries, infecting more than 95,000 people and killing more than 3,000. It has also doused expectations for a global economic rebound and triggered an unscheduled U.S. interest rate cut this week, the biggest since the global financial crisis.

The March 3-5 poll of more than 40 economists, based both in and outside mainland China, forecast growth to fall to a median of 3.5% this quarter from 6.0% in the fourth quarter of 2019, a full per centage point lower than predicted in a Feb. 14 poll.

The range of views was wide, from two banks saying no growth at all to one saying 5.0%. Under a worst-case scenario, the median forecast for Q1 was 2.4%, compared with 3.5% in the previous poll - essentially meaning the worst-case view from three weeks ago is now the central scenario for private sector economists.

Growth is still expected to bounce back in Q2, to 5.6%, slightly lower than the 5.7% forecast three weeks ago. But even there, the range of forecasts was wide, 3.7%-6.5%.

“It’s hard to come up with an optimistic second quarter and the best case I can really suggest is that the second half of the year might start to look a bit more normal,” said Rob Carnell, head of Asia-Pacific research at ING. “If you’re in a city which has been basically closed down or put (under) virtual house arrest, you’re not going to go out to the streets, you can’t go to the cinema, the restaurants with all those sorts of things, economic activity will be substantially negatively affected.”

For the year, growth was expected to slow to 5.4%, which if realized would be the slowest since 1990. Under a worst-case scenario, this was 5.0%. All but one of the economists polled expected it to come in below the previous year’s 6.1% growth rate.

Reuters